If 2018 is the initial stage of DeFi, then the past 2019 can be called the first year of DeFi. This year, thousands of sails competed in the DeFi field, and a hundred flowers bloomed. DeFi has changed from a single spark to a new field that the entire blockchain industry is paying attention to and has given great room for imagination. Everyone has a consensus:The development of the digital asset market in the first ten years depends on exchanges, and the development in the next ten years depends on DeFi。
In June 2019, DAppTotal produced the "Research Report on the DeFi Industry in the First Half of 2019", and conducted a systematic analysis focusing on the three major markets of DeFi: stable currency, lending market, and decentralized exchange.
At the beginning of 2020, we will continue to conduct longitudinal analysis around the DeFi troika, and take the performance of MakerDAO, the industry's top application, as the key data analysis research object in the past year, and take everyone to appreciate the development status of the DeFi industry in the past year and the future of DeFi New trends that may evolve.
Stablecoin market: According to DAppTotal data, as of December 31, the total issuance of stablecoins was 5.827 billion, compared with 2.702 billion at the end of 2018, a total of 3.124 billion newly issued. In the total stablecoin market share, USDT issuance is US$4.76 billion, accounting for 81.7%, and the total issuance of emerging stablecoin markets is US$1.067 billion, accounting for 18.3%.
On the whole, the stablecoin market has achieved rapid growth in 2019. A total of 2.857 billion new USDT tokens have been issued on the entire network, an increase of 150% over 2018. It is worth mentioning that in the past year, USDT has basically completed the transfer from the OMNI network to the ERC-20 network. As of now, ERC20-USDT has not only surpassed OMNI-USDT in circulation, but also has a large daily transaction volume and transaction frequency. exceed.
lending market: According to DAppTotal data, as of December 31, the overall lock-up value of DeFi projects was 874 million U.S. dollars, of which MakerDAO’s lock-up value was 310 million U.S. dollars, accounting for 35.35%, and EOSREX’s lock-up value was 195 million U.S. dollars, accounting for 22.33%, Edgeware has a lock-up value of US$100 million, accounting for 11.50%, and Compound, Synthetix, dYdX, Nuo and other DeFi applications accounted for 30.82%.
On the whole, in 2019, the DeFi lending market has also achieved rapid development: the amount of ETH locked in the industry's leading project MakerDAO increased from 1.87 million at the beginning of the year to 2.35 million at the end of the year, an increase of 25.66%, further consolidating the industry Status; Compound lock-up is US$84.18 million, an increase of 476.97% from US$14.59 million at the beginning of the year. DAI is well-deserved to become the king of circulation in the DeFi lending market, and USDC has become the fastest-growing emerging stable currency in the emerging stable currency market.
DEX market: According to DAppTotal data, as of December 31, the annual cumulative transaction volume of the DEX market in 2019 reached US$2.026 billion. Among them, the total transaction volume in January was US$77.63 million, and it increased to US$119 million in December, an increase of 54.25%.
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1 Introduction
Decentralized Finance (Decentralized Finance), referred to as DeFi, also known as open finance. At present, it is mainly active in the Ethereum network ecology. After two or three years of exploration and development, it has derived a variety of financial innovations such as stable coins, lending platforms, derivatives, prediction markets, insurance, and payment platforms.
Theoretically, DeFi can transfer traditional finance 1:1 to the blockchain network. However, since the development of the industry is still relatively early, DeFi applications are currently mainly based on the troika, stable coins, decentralized exchanges, and lending markets. development area. Below we will carry out detailed data analysis and discussion around these three parts.
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Figure 2. Top DeFi application rankings (DAppTotal.com)
According to DAppTotal.com [1] data, as of December 31, 2019, the top 5 DeFi applications are: Maker [2], EOSREX [3], Edgeware [4], Compound [5], Synthetix [6] .
1.2 Methodology
The data mentioned in the report come from the public data on the blockchain chain. The data analysis part is the result of long-term research by the DAppTotal team. In the past year or so, the DAppTotal team has accumulated a large amount of on-chain data information such as transactions and logs of the head public chain, built a rich and comprehensive database, and developed professional data analysis tools.
This report is based on DAppTotal's own blockchain database and analysis software, and makes a systematic and forward-looking analysis and discussion of the new DeFi industry trends and development expectations for readers.
1.3 Disclaimer
The content of this report is based on our research results and understanding of the blockchain and DeFi industry. However, due to the anonymous nature of the blockchain, we cannot guarantee the accuracy of all data here, and DAppTotal cannot be responsible for any errors or omissions. or use this report to take responsibility for the loss.
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2. Current status of the DeFi industry in 2019
Before 2019, DeFi was an extremely niche frontier field, and there were only a few DeFi platforms such as MakerDAO and Compound in the industry. Since 2019, the DeFi field has shown a situation where a hundred flowers are blooming. Based on the openness and transparency of blockchain technology, the DeFi industry has extended a variety of applications such as payment, stable currency, lending, decentralized exchanges, and derivatives.
DeFi has seen well-known applications such as MakerDAO and Compound on the Ethereum network, and the EOSREX platform has appeared on the EOS network. In addition, many emerging public chains, such as Cosmos, Polkadot, and Nervos, have also expressed that future ecological construction may be used in DeFi applications. The key layout of the field gives DeFi a great imagination.
Overall, in the past 2019, the DeFi industry has completed a series of market foundation development such as basic model exploration, product testing, and user cultivation. Expressed as:
1. Expansion of multiple usage scenarios, due to the overall volatility of the digital asset market, miners became the first users of the DeFi platform. Miners need a large cash flow support for mining, so it is a good choice to mortgage digital assets to the lending platform in exchange for stable coins. . In addition, with the introduction of deposit interest rates on platforms such as Maker and Compound, the demand for DeFi financial management has gradually been discovered.
2. Multiple Product Portfolio Model, due to the open and transparent nature of blockchain technology, DeFi products have strong composable features. For example, DAI borrowed from Maker can be stored in Compound and then loaned out in dYdX for transactions. Compared with the island characteristics of user data in the traditional financial field, DeFi products can derive new models through product combinations to provide users with a more integrated product and service experience.
3. The trend of multi-collateralized assets, in order to hedge against the pressure brought by the volatility of single digital asset mortgages on the stability of the lending market, MakerDAO launched Multi-Collateral DAI (MCD) in late November, and the first batch of digital assets supporting BAT was added to the mortgage portfolio. Maker launched multi-collateral DAI to hedge against the impact of single ETH asset fluctuations on platform stability. As more and more digital assets join the ranks of mortgages, the DeFi lending platform will gradually stabilize.
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3. DeFi - Stablecoins
Stable currency is a digital asset born against the volatility of digital assets. At present, the mainstream stablecoins in the market are based on the anchoring method, such as the USDT issued by Tether, which is 1:1 pegged to the US dollar, and there is also a stable currency that is anchored to digital assets and maintained stable by dynamic algorithms, such as DAI.
Everyone is familiar with USDT. Since it was issued on the Bitcoin network in 2014, it has been firmly sitting on the top spot in the stablecoin market. According to DAppTotal data, as of December 31, the total issuance of the stable currency market was 5.827 billion US dollars, of which the total issuance of USDT on the entire network was 4.76 billion US dollars, accounting for 81.7% of the overall market share, of which OMNI-USDT issuance was 1.54 billion US dollars, ERC20-USDT circulation is 2.3 billion US dollars, and TRON-USDT TRON network circulation is 916 million US dollars.
Overall, in 2019, a total of 2.857 billion new USDT tokens were issued on the entire network, an increase of 150% compared with the stable currency in 2018. The main reason for the massive issuance of USDT is the increase in demand brought about by the rising market.
According to DAppTotal data, the total circulation of the emerging stablecoin market is 1.067 billion, of which USDC circulation is 522 million, accounting for 48.8%, ranking first, and PAX circulation is 223 million US dollars, accounting for 21%. Ranked second and third is TUSD, with a circulation of 154 million US dollars, accounting for 14.4%. Other emerging stable currencies include DAI, GUSD, EURS, nUSD, etc., accounting for 15.8%.
Over the past year, as the market has been skeptical about the centralization of USDT, this has given other emerging stable currencies greater market opportunities.
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Figure 4 Historical Issuance of the Stablecoin Market
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Figure 6 Daily transaction volume of stablecoins in 2019
Figures 5 and 6 show the number of daily on-chain transactions and total transaction volume of stablecoins in 2019
Moreover, it is worth mentioning that USDT is currently issued on Bitcoin, Ethereum, and TRON networks. In addition, USDT is also issued on the EOS network, and even CNHT, which is anchored to RMB, is issued.
3.1 The development status of the stablecoin market
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4. DeFi - Lending
The current main application scenario of DeFi lending is similar to the deposit and loan behavior in the traditional financial field, where users mortgage digital assets to lend stable currency or legal currency. In a bear market, this will meet the needs of a large number of users to hoard coins and attract users to mortgage and borrow.
Usually, if the lending demand in the lending market is greater than the deposit demand, more people will be attracted to mortgage digital assets, and the platform will also generate more profits and operate healthier.
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Figure 7 2019 lending market share chart
DAppTotal focuses on the multi-dimensional data analysis of the following five lending platforms: Maker, Compound V1, Compound V2, dYdX, Nuo, Lendf.Me.
These platforms are all running on Ethereum. Maker was established at the earliest and is also the industry leader. We will focus on the next chapter 6. Compound underwent a major upgrade in the middle of the year. We will separate it into two parts, V1 and V2. .
4.1 Borrowing and lending of digital assets
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Figure 10 Mortgage assets of DeFi lending projects in 2019
4.2 Distribution of Outstanding Assets
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Figure 11 Distribution of Outstanding Assets on DeFi Lending Platforms in 2019
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Figure 12 Mortgage rate of DeFi lending platforms in 2019
4.3 Interest rate fluctuations on lending platforms
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Figure 13 2019 DeFi Lending Platform Asset Borrowing Rates
4.4 Accumulated user volume in the DeFi lending market
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Figure 15 User overlap in the DeFi market in 2019
4.5 Current status of DeFi lending market
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5. DeFi - Decentralized Exchange
Decentralized exchange (DEX) has always been an important part of the digital asset market. It should have played the role of a centralized exchange, but due to transaction efficiency and user scale, it has always been active in the industry with a niche attitude among.
However, due to the complete decentralization, transparency, and openness of DEX, it is especially popular with some geek users. Many small project parties use DEX as a currency for the first launch of the online platform, and some hackers also use DEX as a key money laundering channel. .
There is no centralized authority control, there are not too many KYC channel restrictions, there is no secret price manipulation and transaction volume fraud, and all transaction records are on the chain. DEX is highly anticipated by everyone for its natural blockchain native features And attention is also regarded as the final form of future digital asset exchanges.
In this chapter, we will present the data and analysis of 17 decentralized exchanges based on the Ethereum network: Eth2dai, IDEX, Kyber, Uniswap, ForkDelta, DDEX, The Token Store, AirSwap, Radar Relay, Paradex, Bancor, Tokenlon, Star Bit, LedgerDex, Bamboo Relay, The Ocean and TokenJar.
5.1 DEX market share and transaction data
Looking back at the data of decentralized exchanges in the past year, the overall active users and market transaction volume have been steadily rising slightly, but they also show a trend of periodic instability. In 2019, Eth2dai had the highest transaction volume among DEXs, accounting for 25% of the market share; IDEX and Uniswap ranked second, each accounting for 20% of the market share; Kyber ranked third, accounting for 12% of the market share, The cumulative transaction volume for the year was US$2.026 billion.
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Figure 18 Monthly transactions on decentralized exchanges in 2019
Figure 17 is a monthly transaction volume graph of DEX, Figure 18 is a monthly transaction number graph, and Figure 19 is a monthly active user graph.
5.2 Status Quo of DEX Market
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6. MakerDAO Data Annual Report
In this chapter, we focus on the data overview of MakerDAO, the current industry leading product. Through the development of MakerDAO in the past year, we can have a general glimpse of the development status of the DeFi industry in the past year.
6.1 Overview of MakerDAO Basic Data
MakerDAO is the earliest DeFi platform in the blockchain field. It was established at the end of 2017. It issues a decentralized stable currency DAI that is regulated by algorithms, and is anchored to the US dollar at 1:1.
According to DAppTotal data, as of December 31:
1. Maker lock-up value is 310 million US dollars, accounting for 35%, firmly occupying the first place in the DeFi lending platform;
2. Maker's single-collateral DAI (SAI) debt ceiling is adjusted to USD 95 million, and the multi-collateral DAI debt ceiling is adjusted to USD 120 million;
3. Among the assets mortgaged by Maker, the total amount of ETH mortgaged is 2.35 million, an increase of 25.66% compared with 1.87 million at the beginning of the year; among the newly launched multi-mortgage DAI, the total amount of ETH mortgaged exceeds 300 million US dollars, and the total amount of BAT mortgaged is 423 Ten thousand U.S. dollars;
4. The total amount of DAI issued in Maker is 90.28 million, and the total amount of SAI issued is 34.58 million, of which 77.34 million were transferred from SAI to DAI;
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Figure 22 Basic data overview of Maker V1 and V2
6.2 Overview of MakerDAO's one-year development history
Since 2019, the locked value of MakerDAO has increased from 262 million US dollars at the beginning of the year to 308 million US dollars at the end of the year, achieving a steady development trend. At the same time, the entire DeFi industry has also been freed from the oligopoly of MakerDAO, showing a diversified and extended development, and a series of financial-based innovative model products such as Compound, dYdX, Uniswap, and Synthetix have emerged.
Moreover, with the continuous enrichment of market competition formats, similar to the mutual influence relationship between "central bank" and "commercial bank", market-oriented mutual circulation among multiple platforms such as Maker, Compound, and dYdX has begun to appear.
The DAI generated after the Maker platform is mortgaged into ETH will flow into platforms such as Compound and dYdX under the self-adjustment of the market, especially when the deposit rate launched by platforms such as Compound is higher than Maker's borrowing rate.
Since March last year, during the upward trend of the market, Maker has raised the interest rate more than ten times, with the highest increase to 20.5%. This has provided platforms such as Compound with greater development opportunities. The interest rate difference between them is used to squeeze the wool.
In order to further increase the activity of users on the platform, MakerDAO cooperated with Coinbase to conduct a relatively successful interactive marketing in August. In just one week, the scale of MakerDAO users climbed in a straight line.
However, this cannot compete with the rapid development of platforms such as Compound. After August, Maker began to lower the borrowing rate to activate user activity by attracting more people to deposit and borrow. However, due to the high volatility of the digital asset market, a sharp plunge in the market may lead to the liquidation of a large number of loan orders.
According to data from DAppTotal, on September 25 alone, a total of 6.32 million USD orders were liquidated on the MakerDAO platform, which had a great impact on the stability of the platform.
In order to reduce the impact of frequent currency price fluctuations on the system, MakerDAO launched the multi-mortgage DAI system in November. By introducing BAT and other digital assets, it can reduce the volatility caused by a single ETH mortgage to the market. In addition, MakerDAO also launched the deposit rate (DSR), and the Oasis Trade decentralized trading platform.
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7. Conclusion
In this report, we analyze the development status of the three major carriages of the DeFi industry: stable currency, lending market, and decentralized exchange.
Stablecoin market: In 2019, the overall circulation of the stablecoin market was US$5.827 billion, of which the total circulation of USDT was US$4.76 billion, accounting for 81.7%, distributed on Ethereum, OMNI, EOS and other networks. The issuance of emerging stablecoins was $1.067 billion, accounting for 18.3%. In the past year, USDT has basically completed the transfer from the OMNI network to the ERC-20 network, and the number of newly issued USDT in 2019 was 2.857 billion, an increase of 1.5 times compared to 2018.
Lending market: In 2019, as of December 31, the overall locked-up value of DeFi projects was US$891 million, of which MakerDAO locked-up value was US$310 million, accounting for 35%, and EOS locked-up value was US$200 million, accounting for 22.55% , Edgeware locked up a value of $105 million, accounting for 11.88%, Compound, Synthetix, dYdX, Nuo and other DeFi applications accounted for 29.77%. In the past year, the lending platform has accumulatively lent a total of $931 million and borrowed a total of $2.4 billion.
DEX market: In 2019, the overall trading volume of decentralized exchanges (DEX) was $2.026 billion. In the past year, the total monthly transaction volume of DEX has maintained a steady growth, from $77.63 million in January to $119 million in December.
Overall, in the past year, the DeFi industry has achieved rapid development, and there have been trends in multi-product portfolio models, multi-asset mortgages, and multi-scenario applications.
In 2020, blockchain technology is leading a new round of global technological and industrial transformation. Directors from various countries have also held meetings to discuss how to supervise and manage virtual assets and virtual asset service providers (VASPs), which means that the DeFi industry will be brought into regulation, and regulations will be further strengthened in terms of anti-money laundering compliance.
At the same time, as the DeFi market continues to grow, due to its proximity to digital assets, the DeFi field will also become a hard-hit area for hacker attacks, which also brings new challenges to the safe and healthy development of the DeFi industry.
references
references
[1] DAppTotal is the world's leading DApp data service platform,https://dapptotal.com/
[2] MakerDAO official website,https://makerdao.com/en/
[3] EOS REX official websitehttps://eosauthority.com/rex
[4] Edgeware official website,https://edgewa.re/
[5] Compound official website,https://compound.finance/
[6] Synthetix official website,https://www.synthetix.io
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